Introduction to Office Insurance
Obtaining cheap office insurance is an important consideration for most business owners whether they have an office at home or in a commercial building. Insurance for your office should be one of the first items on any business budgeting list, there are a multitude of risks that face an office, as well as the replacement cost of contents, there are additional perils that can all be insured against. Cover usually comes on a package basis, a number of the sections will be compulsory whilst others will be a pure matter of choice and budget. In the main, you can choose sums insured to suit your needs. in some of the sections, the insurers will provide a sum insured for you, this will usually be adequate for most policyholders needs, however sums insured should always be checked carefully and discussed, especially if increases are needed. The main covers available are:-
Types of Office Insurance – an office, for insurance purposes, is usually defined as a room or sets of rooms, used as a place of business, where professional or clerical duties are carried out. There are simply hundreds of different occupations carried out in offices, but they all usually fall under the above definition because of the absence of any trade processes or manufacturing being carried out. This makes them, relatively low risk from an insurance point of view, which of course results in lower premiums in general, than say a shop or factory. Offices can be located, in purpose built office blocks, or sometimes, they utilise former commercial premises. In recent years, there has been a growing tendency, for workers to set up offices at home. Home office insurance, can sometimes be added to a standard homeowners insurance policy but in the main it is a stand alone contract, you have to obtain from a specialist provider. You may find that you usually home insurance policy will exclude business equipment and liability insurance relating to your work, it’s worth checking these details if you intend to work from home. Office insurance is divided in to many sections, each providing different covers. The main sections of the policy are as follows:-
Building Insurance– if you own the building in which your office is located, then you will be responsible for arranging the insurance and providing you note your lenders interest and the policy your choose is acceptable to them, you are pretty much free to buy your insurance from where ever you like. If you rent or lease your building, then the landlord will arrange the insurance and charge you accordingly. Some property that is operated as office space is rented to tenants on a licence basis, this is quite a popular method especially with smaller operations, a fixed monthly fee is paid which will often include building insurance charges. If you are responsible for insuring your own building, the insurers will require certain information to help calculate the quotation. They will need the address and the postcode and the construction of the property ( including if the floors are made of wood or concrete). They will need an accurate rebuilding cost, which you may need professional help to obtain.
Generally speaking, purpose built office blocks with concrete floors will be cheaper to insure. Some office block owners, will rent space in the block, to other companies. If your building is multi tenure, this should be pointed out to the insurance company, who many want you to provide a list of all the companies that occupy the building or at least conformation, that only office activities are being carried out in the building. if part of your building is empty, this is a material fact and also should be declared. Details of the security may also be required, with information on what provisions are made for making the building secure at the end of each working day. As well as a wide range of perils, there are usually some additions such as trace & access insurance, this section of the policy will also be extended to include loss of rent, if as a result of a claim, the property becomes uninhabitable. If you have any tenants in the building, they will of course be responsible to insure themselves against business interruption or increase costs of working, this can be done under their own office contents insurance. Terrorism insurance can usually be purchased as an extension.
Contents Insurance – for most people, this is the main part of an office insurance policy, it can be broken down in to various sub parts; General contents, high risk contents ( such as computers) stock, goods in trust. Although, most policies go in to great depth to define contents, in essence, they are as follows; general contents will include all of your: tables, chairs, desks, filing cabinets etc. High risk contents will in the main include, electronic equipment, such as computers, photocopies, audio visual equipment etc. Stock is usually reserved for items such as trade samples. Most insurers will not expect you to be keeping a good deal of stock on the premises, in the main it should be reserved for stock for demonstration purposes, a high value of stock on the premises can alter the risk profile and the insurance rating may change. Goods in trust relates to items you are holding on behalf of another that you are responsible for. Documents relates to stationary, manuscripts, patterns, models, plans, business books, films or transparencies. The contents will be covered in the office against a wide range of insurance perils. These are all fairly standard but any variance should be pointed out to you. To obtain a quotation for office insurance, you will need to add up the replacement costs of all the above amounts, this amount will be used to help calculate your premium.
It is possible to obtain an extra option, to include ‘All Risks’ insurance on some items. This is usually reserved for items taken away from the office premises, such as lap top computers or exhibition equipment. All risks insurance is more expensive, so the sums insured are usually kept to the absolute minimum. You may be asked to specify the equipment you require cover on away from the premises. One of this most difficult pieces of information to obtain and always required by insurers, is that relating to the security of the premises. Often, offices are located within a block building that has other offices within the same building. This does present a security problem for insurers as the main exit door to the building is not under your sole control. The insurers will want to know how the final exit door is controlled but will be more interested in your own final exit door ( to your actual office). They will expect this door to reach a certain level of security and depending what floor you are on, may wish to have information regarding the windows as well. Your office building may be alarmed, it can make a difference, if this just for the whole building or is zoned ( you can control your own portion). Zone alarms , offer a greater degree of protection, especially if you have left for the evening but other parts of the same building are still occupied. If you rent your premises, the landlord should be able to give you information as to the types of lock on your doors, if a security upgrade is needed, your landlord will need to be consulted.
Liability Insurance – under an office insurance policy, cover is usually provided for public & employers liability insurance. This is mainly a ‘premises’ risk, but will usually cover work away from the office building, providing it is of a clerical nature. The public liability section will cover you for sums you are legally obliged to pay for accident & injury to visitors ( or their property). If you have any employees, you are required by law to effect employers liability insurance. Another requirement of the 1969 Employers Liability Protection act, is to display a certificate proving that cover is in force. The certificate must be displayed in a prominent position where all employees can view it. Expired certificates of insurance, have to be kept for a period of forty years.
Loss of Money – almost all offices will carry some money even if it is only small amounts, cover is available under this section of the policy. The definition of money includes : cash, bank & treasury notes, cheques, bankers drafts, giro cheques, postal orders, money orders, premium bonds, postage stamps ( unused) & national insurance stamps. The definition is extended to include, non-negotiable money such as : crossed cheques & the like, national savings certificates, premium bonds, un-expired franking machine credits and credit & debit card sales vouchers. As well as the above, credit, debit, cash & charge cards are also included. The insurance company will usually set the sum insured, you will have to make sure it is adequate for your needs. Cover will also include out of office hours, although the sums insured may be lower and you will have to store the cash in an approved safe. Money lost in transit is also covered. Sometimes, you can increase the limit of indemnity in respect of money, you must study the policy section carefully as the higher the sum insured, the more persons will be required to be present, during transit.
Personal Accident– you can usually add on personal accident cover for all members of staff, or certain staff you choose. Cover is provided on a ‘unit’ basis, the more units you choose, the higher the sum insured.
Business Interruption Insurance – sometimes, following a serious event such as a fire or a flood, you may find you are unable to use your property for the period of time, whilst repairs are being carried out. The perils section of your policy, will pay for damage to your property or it’s contents, but this section of the policy will protect you against loss of your revenue. There are two types of cover included under this section, sometimes, both are included, sometimes you can choose one or the other and there may be a difference in premium. The covers are : 1- protection against loss of gross income, 2 increase cost of working. Depending on the type of business you run, one may be more useful than the other. Some office business, would find it quite easy to keep trading after a claim A solicitors or accountants office for example, could probably rent a temporary office near by, until the restoration work had been completed. For these type of business, increase cost of working may be sufficient cover.
However, some offices such as travel agents or estate agents or even insurance brokers, may rely on a good deal of passing trade, particularly if they have shop front premises. In the event of a fire for example at this type of premises, a good deal of revenue may be lost if the’ shop” cannot open for business. for this type of business, the loss of gross income cover will probably be more pertinent This section of the policy comes with some useful extensions which again may or not be useful, depending on the type of office and what it actually does, they include: denial of access, failure of public utilities, failure of suppliers & disease. In calculating the premium for this section, the insurer may simply provide a sum insured for you, or they may ask you to provide details of your gross profit. If you simply want to elect for increase cost of working cover, you may be able to specify a sum insured, you can with some thought, work out an amount, to keep you business running in a new location for a period of time whilst your own premises are being reinstated.
Legal Expenses Insurance – in some cases, legal expenses, can be added on to an office insurance policy. This will usually include a 24 hour advice line, where you can call up and receive advice in respect of any matter relating to your business. Sections usually covered include, employment disputes, compensation awards, property protection, contract disputes and in some cases, debt recovery. The above are the most typical covers available under an office insurance contract, most of the sections have additions if required and these can be discussed at the quotation stage. When applying for your office insurance quotation, it’s important to disclose all material facts to the insurers. Failure to give accurate information may result in a claim not being paid.